Poverty PDF

CrackitToday Notes POVERTY India achieved a huge economic growth, but even now a significant proportion of its population was not able to gain prosperity and were left out of the development process, in other words the economic growth was not inclusive. According to the World Bank, Poverty is pron...

CrackitToday Notes POVERTY India achieved a huge economic growth, but even now a significant proportion of its population was not able to gain prosperity and were left out of the development process, in other words the economic growth was not inclusive. According to the World Bank, Poverty is pronounced deprivation in wellbeing and comprises many dimensions. It includes low incomes and the inability to acquire the basic goods and services necessary for survival with dignity. Poverty can have two broad categories like absolute poverty and relative poverty. Absolute Poverty is a condition in which people do not even get a minimum income needed to maintain their lives. India has higher prevailing rates of malnutrition, hunger, homelessness, unemployment and hence its absolute poverty also remains high. Relative poverty refers to a comparative perspective where a section of population is relatively deprived compared to another better off section of population. This includes amenities like house, access to education, healthcare, social security benefits, leisure, comfort etc. Key Terms Poverty Line: The conventional approach to measuring poverty is to specify a minimum expenditure (or income) required to purchase a basket of goods and services necessary to satisfy basic human needs and this minimum expenditure is called the poverty line. Poverty Line Basket: The basket of goods and services necessary to satisfy basic human needs is the Poverty Line Basket. Poverty Ratio: The proportion of the population below the poverty line is called the poverty ratio  Poverty gap: It is the difference between the mean income among the poor and the poverty line. Causes of Poverty High population growth rate Illiteracy, caste system and bonded Labour Urban rural divide Unemployment and underemployment Lack of reach of poverty alleviation programs Lack of skill development Disparities in income distribution and ownership of assets. The Planning Commission used to estimate poverty using data from the large sample surveys on household consumer expenditure carried out by the National Sample Survey Office (NSSO) every five years. It defines the poverty line on the basis of monthly per capita consumption expenditure. Methods to estimate Absolute Poverty: Uniform Resource Period (URP): Up until 1993-94, the poverty line was based on URP data, which involved asking people about their consumption expenditure across a 30-day recall period that is the information was based on the recall of consumption expenditure in the previous 30 days. Mixed Reference Period (MRP): From 1999-2000 onwards, the NSSO switched to an MRP method which measures consumption of five low-frequency items (clothing, footwear, durables, education and institutional health expenditure) over the previous year, and all other items over the previous 30 days. That is to say, for the five items, survey respondents are asked about consumption in the previous one year. For the remaining items, they are asked about consumption in the previous 30 days. Various Estimates of Poverty in India: Dadabhai Naoroji in his book, “Poverty and Unbritish Rule in India” made the earliest estimation of poverty line ranging from ₹16 to ₹35 per capita per year. He never used word ‘poverty line’ but instead used subsistence-based poverty line. National Planning Committee’s (1938) headed by Nehru: poverty line ranging from ₹15 to ₹20 per capita per month. However, it was not tagged as poverty line of the country. The Bombay Plan (1944) proponents had suggested a poverty line of ₹75 per capita per year. B S Minha (1956) poverty estimate is 65%, M S Ahluwalia (1960) poverty estimate is 39%, PD Ojha (1960) poverty estimate is 44%, PK Bardhan (1968) poverty estimate is 54%: All these used same source of data but different methodologies. Dandekar and Neelkanth (1971): Fixed calorie intake 2250 per capita per day. Poverty estimate for rural is 40% and urban is 50%. YK Alagh Committee (1977-1979) In the initial decades after Independence poverty was measured in terms of income levels of individuals. Alagh Committee is the first to come up with an official poverty line. It recommended a poverty line based on calorie intake. It considered people who consume less than 2100 calorie in Urban areas as poor whereas in rural areas it is 2400 calories.  The difference is justified by the fact that rural people do more physical work than their urban counterparts. This committee had a drawback because Health and education was assumed to be provided by State Governments. Lakdawala Committee (1989-1993) This formula included the calorific limits of Alagh committee and it also included health and education components. It considered the total amount of money needed per person in a house to meet his calorie intake. This method was reported to have methodological errors as it showed the poverty line as double compared to previous estimates. Tendulkar Committee (2004-2005) It suggested a shift away from calorie based model and focused on nutritional outcomes and included health, education, transport and electricity. It is based on spending per individual over a fixed period for an essential basket of goods ie., cost of living. India presently follows this method for estimation of poverty. It set Rs 27 for rural areas and Rs 33 in urban areas for consumer spending as the reference limit and based on this they estimated that 37.2% of the Indian population as poor based on 2004-2005 data. Rangarajan committee on poverty (2011-2012) It has taken monthly consumption expenditure per person or per household as a tool for calculating poverty lines. Monthly consumption expenditure per person or per household as a tool, daily per capita expenditure for Rural- Rs. 33 and Daily per capita expenditure for Urban- Rs. 47 Overall poverty- 29.5 Percent (in the year 2011-12): Rural- 30.9 Percent (in the year 2011-12); Urban- 26.4 Percent (in the year 2011-12) Calorie, Protein, fat intake values were taken into account to estimate poverty. Limitations of Rangarajan Committee This measure cannot be suited to various welfare programs that will have to take into account the particular kind of deprivation. Poverty is not same as that of hunger which is even worse. It also does not mean a comfortable standard of living. It only represents an absolute minimum. Socio-Economic Caste Census methodology To estimate the BPL population, SECC followed a 3 step process: Automatic Exclusion, Automatic Inclusion, Neither automatically included nor automatically excluded. Components: Food component, Education, Clothing, Conveyance, Rent, Behaviour related expenditures. It was found that the percentage of people below the poverty line in 2011-12 was 30.95 per cent in rural areas and 26.4 per cent in urban areas.